AAPG International Conference & Exhibition 12 – 15 September 2010 Calgary, AB. Canada An Update on the Namibia Oil and Gas Exploration Sector Victoria Sibeya Geoscientist WWW.NAMCOR.COM.NA Robert Mwanachilenga - National Petroleum Corp of Namibia

Presentation Content Introduction Fiscal and Legal Terms License Activity Exploration History Namibian Basins and Data Coverage Exploration opportunities Summary Robert Mwanachilenga - National Petroleum Corp of Namibia

Introduction Robert Mwanachilenga - National Petroleum Corp of Namibia

Country Information Government type: Republic Capital: Windhoek Independence: 21 March 1990 Population: 2.1 million (2007 est.) Area: 825 418 km2 Coastline: 1 572 km GDP : US $15 billion (2009) Corporate income tax rate: 35%, Value added Tax (VAT) 15% Robert Mwanachilenga - National Petroleum Corp of Namibia

Legal The Petroleum (Exploration and Production) Act of 1991 and amendments, The Petroleum (Taxation) Act of 1991, and amendments The Petroleum (Regulations) Act of 1991 4. The Petroleum Agreement – between the Government and Operator Robert Mwanachilenga - National Petroleum Corp of Namibia

Fiscal The three Main Components of the Namibian Fiscal Package are: Royalty Rate 5% of Market Value of Oil & Gas Produced. Petroleum Income Tax (PIT) Rate 35% of Taxable Income The Additional Profits Tax (APT) Incremental 3-tiered Tax Based on project IRR. First additional tax rate is determined by a formula in the Act. 2nd and 3rd Tax Rates are negotiable. Robert Mwanachilenga - National Petroleum Corp of Namibia

Fiscal…….. Fees/charges - License Application Fees (N$ 3,000 to N$ 30,000), - Annual License Area Rental Charges, (N$ 60/km2 for Exploration Licenses till N$ 1,500/km2 for Production Licenses). - Annual training sums – biddable and negotiable. 1 USD ≈ N$ 7.6240 September 13, 2010 Robert Mwanachilenga - National Petroleum Corp of Namibia

Fiscal….. - Decommissioning Trust Fund (as of 1998 Petroleum Laws Amendment Act) payment into escrow account from date when ½ estimated reserves are produced. - PA: Standard Petroleum Agreement model: - modern accounting procedure; - detailed valuation based on fair market pricing principles - Bank and Performance Guarantee, etc. Robert Mwanachilenga - National Petroleum Corp of Namibia

Fiscal - No signature, discovery or production bonuses Most items needed for petroleum operations can be imported duty free (Fuel is not duty free, but rebates are available upon application) Non-resident shareholders tax - oil companies exempted Robert Mwanachilenga - National Petroleum Corp of Namibia

License activity Historic post-independence 1990 - 2009 Robert Mwanachilenga - National Petroleum Corp of Namibia

Current Licenses Current Licensees 2 Reconnaissance 10 Exploration and 1 Production Robert Mwanachilenga - National Petroleum Corp of Namibia

Exploration History Onshore First Well Drilled in 1928 (Berseba, Nama Basin) Two Further Wells drilled in the Nama Basin by Artnell (1963) and Elf (1971) ST-1 Drilled in Owambo Basin by Etosha Petroleum in 1959 Three Further Wells Drilled in the Owambo Basin by Etosha Petroleum OPIC Gets Etosha Petroleum Concessions and Drills OPO-1 in the 1990’s Offshore: Kudu 9A-1 Drilled in 1974 – Discovery Well for Kudu Gas Field 7 Further Wells Drilled in Kudu Gas Field Exploration Waned Until the First Licensing Round in 1991-1992 Five Operators Were Awarded Licenses NAMCOR Acquires Aeromagnetic Data For Offshore Namibia in 1998 Underexplored – A Lot of Opportunity!!! Robert Mwanachilenga - National Petroleum Corp of Namibia

Namibian basins Robert Mwanachilenga - National Petroleum Corp of Namibia

Data – Geology

Data – Seismic Coverage Robert Mwanachilenga - National Petroleum Corp of Namibia

Data - Wells Total 16, 8 in the Kudu field Robert Mwanachilenga - National Petroleum Corp of Namibia

FARM-IN OPPORTUNITIES- WALVIS BASIN (ONDJOU) RESERVOIR: Shallow marine to continental sands SEAL: Deep marine shales CHARGE: Drains multiple sources UNRISKED P50 RESERVES: 913 MMbbls (Expectation: 185 MMbbls)

FARM-IN OPPORTUNITIES- LUDERITZ BASIN Summary of the license block: The license block is located in the Luderitz Basin. Ownership = 100% NAMCOR Total area of the licence block is about 38,214 km2. Prospect A: Large 4-way dip closed structure Prospect B: Large 4-way dip closed structure with reservoir indicators. Lead G: Kudu look alike Down cutting distributary/fan system in upper Cretaceous & Tertiary. Extensive Toe-thrust system in the south of the block. Multiple direct and indirect hydrocarbon indicators.

SUMMARY - Good Fiscal and Legal Regime - Definite Increase in Exploration Activity - Focus on both Onshore & Offshore Basins - New Data Acquisition Campaigns Planned for 2010 - 11 - Very Low Well-Basin Density - Namibia Still Very Much Underexplored!! Robert Mwanachilenga - National Petroleum Corp of Namibia

Thank You! Please come visit us at booth nr. 629